Will American mass transit make a comeback?

Transit ridership fell in 31 of 35 major metropolitan areas in the United States last year, including the seven cities that serve the majority of riders, with losses largely stemming from buses but punctuated by reliability issues on systems such as Metro, according to an annual overview of public transit usage.

…Researchers concluded factors such as lower fuel costs, increased teleworking, higher car ownership and the rise of alternatives such as Uber and Lyft are pulling people off trains and buses at record levels.

I know, I know — if only we would spend more money, do it better, and so on.  An alternative and really quite simple hypothesis is that mass transit is largely a 20th century technology, it is being slowly abandoned, and in the United States at least its future is dim.  The more you moralize about the troglodyte politicians and voters who won’t support enlightenment, the harder it will be to give that hypothesis an analytically fair shake.

And what about the D.C. area?:

Metro’s ridership dropped by 3.2 percent. The trend was largely driven by a 6 percent decline in bus ridership. Dramatic losses to subway ridership, including a 10 percent decline in 2016, had appeared to level off by 2017, when the total number of trips fell by about a percent and a half.

Metro has said about 30 percent of its ridership losses are tied to reliability issues, with teleworking, a shrinking federal workforce, Uber and Lyft, and other factors to blame for the rest.

Here is the full WaPo story by Faiz Siddiqui.

Will there be a trade war with China?

No.  That is the topic of my latest Bloomberg column.  Here is one bit:

Keep in mind that the U.S. is a relatively large buyer in many markets; in economic lingo, it has some monopsony power. So if it cuts back purchases of, say, Chinese toys, China cannot simply reroute those now-surplus toys and sell them to Canada or Indonesia at the same price. This gives the U.S. significant power in trade conflicts. And China cannot throw around its weight as a buyer in similar fashion because it does not import on the same scale.

The Chinese don’t have that many ready American targets for economic retaliation. Aircraft are one of the major U.S. exports to China, where market demand for domestic flights is rapidly growing. Beijing has a backlog of about 400 orders with the Boeing Co. It could try to switch some or all of those orders to Airbus SE, but that would mean delays. Airbus would also know it could increase its prices and the Chinese would have to pay. As a buyer, China doesn’t have as much leverage in this market as it might appear.

The U.S. has many more targets when it comes to restricting foreign investment, as there is plenty of Chinese capital that would love to flee. The Chinese government already limits the activities of the big technology companies and many other U.S. multinationals in China, so they don’t have as many extra sticks in this regard.

The reality is China has margins for responding to the U.S., but they are mostly not in the economic realm.

I thank Ray Lopez for a useful email conversation related to this column.

Markets in everything

Rich People Will Soon Be Able To Buy Fake Meteor Showers On Demand.

In the latest scheme of the booming private space industry, a Japanese company proposes to light up the night with made-to-order shooting stars…

The fireworks will come courtesy of a satellite some 220 miles high, owned by the world’s first “aerospace entertainment” firm, Astro Live Experiences, or ALE.

The brainchild of University of Tokyo astronomer Lena Okajima, the spacecraft will circle the globe and kick out 15 to 20 small metallic pebbles on command.

Here is the story, and for the pointer I thank DL.

How much more can be built in Los Angeles?

Now, a bill under consideration in Sacramento would upend that arrangement, allowing multistory apartments and condominiums in neighborhoods where city leaders have long prohibited them. Senate Bill 827, written by state Sen. Scott Wiener (D-San Francisco), would loosen or eliminate restrictions on height, density, parking and design for residential properties near major rail and bus stops.

The impact could be huge. A Times analysis found that about 190,000 parcels in L.A. neighborhoods zoned for single-family homes are located in the “transit rich” areas identified in SB 827. Residences in those neighborhoods could eventually be replaced with buildings ranging from 45 to 85 feet, city officials say.

“While we are still evaluating the full effects of the bill, close to 50% of the city’s single-family homes would be impacted under SB 827,” said Yeghig L. Keshishian, spokesman for the Department of City Planning.

That is from Zahniser, Dillon, and Schleuss at the LA Times.  Via Matt Yglesias, who adds:

Note that ecologically the big win isn’t even about transit-oriented development. California’s mild climate and low-carbon electricity mix make it one of the greenest places in America, so more houses in California is an environmental win.

It is time for this referendum to translate into larger excitement at the national level, as say Proposition 13 once did and some of the marijuana referenda have done as well.

Here is a thread on real estate in the Bay Area, worst is maybe Menlo Park.

Monday assorted links

1. Europe is dropping the ball on AI and in some ways positively discouraging it.  And too many crummy firms in Europe: “Using a new survey, we show that the dispersion of marginal products across firms in the European Union is about twice as large as that in the United States. Reducing it to the US level would increase EU GDP by more than 30 percent. Alternatively, removing barriers between industries and countries would raise EU GDP by at least 25 percent.”

2. Remember when Clearchannel was going dominate all radio, forever?

3. Marcel Gauchet on democracy and the sweep of history.

4. How two economists got access to IRS tax data.  Bravo to them I say, but it’s worth noting that the shift from regression-driven to data set-driven economics has been a remarkably inegalitarian development, widely praised by most top academic economists.  So often progress means a willingness to disregard or even stomp on egalitarian norms.

5. The economics of why some restaurants need to leave Queens.

6. Kling on the new Chetty-Hendren-Jones-Porter results.

7. Those new service sector jobs: Iraqi war architect Paul Bremer now a ski instructor in Vermont.

Opioids are not mainly an economic phenomenon

Overall, our findings suggest that there is no simple causal relationship between economic conditions and the abuse of opioids. Therefore, while improving economic conditions in depressed areas is desirable for many reasons, it is unlikely to curb the opioid epidemic.

That is from Janet Currie, Jonas Y. Jin, and Molly Schnell in a new NBER working paper.

The day job

ONCE UPON A time, artists had jobs. And not “advising the Library of Congress on its newest Verdi acquisition” jobs, but job jobs, the kind you hear about in stump speeches. Think of T.S. Eliot, conjuring “The Waste Land” (1922) by night and overseeing foreign accounts at Lloyds Bank during the day, or Wallace Stevens, scribbling lines of poetry on his two-mile walk to work, then handing them over to his secretary to transcribe at the insurance agency where he supervised real estate claims. The avant-garde composer Philip Glass shocked at least one music lover when he materialized, smock-clad and brandishing plumber’s tools, in a home with a malfunctioning appliance. “While working,” Glass recounted to The Guardian in 2001, “I suddenly heard a noise and looked up to find Robert Hughes, the art critic of Time magazine, staring at me in disbelief. ‘But you’re Philip Glass! What are you doing here?’ It was obvious that I was installing his dishwasher and I told him that I would soon be finished. ‘But you are an artist,’ he protested. I explained that I was an artist but that I was sometimes a plumber as well and that he should go away and let me finish.”

That is from Katy Waldman in the NYT.  You will find similar themes discussed in my earlier book In Praise of Commercial Culture.  In her article I also enjoyed this part:

Edi Rama, the Prime Minister of Albania, sometimes feels his hand doodling as he contemplates a political decision. The art pours out to center and steady him. In 1998, Rama left a promising career as an artist in Paris to become Albania’s minister of culture. Now the country’s leader, he shows his loose, improvisatory drawings and sculptures in galleries around the world. “I found myself drawing almost all my working time whilst interacting with people in my office or on the phone,” he said in a 2016 interview. “I began to understand that my subconscious was being helped … by my hand to stay calm while my conscious had to focus on demanding topics.”

Recommended.

My Tokyo advice for Scott Sumner

Eat both quality French and Italian food there.

They still have real CD shops, if that matters to you.

Spend some time in the underground/subway city parts, maybe Shinjuku station, a few others.

Not sure if the old fish market is still up and running, worth a visit if it is.

Get your iPhone ready for translate functions, print and voice.

Getting lost there is great, don’t obsess over sights.

National Museum. The Western museums are decent but also not essential.

Look for a neighborhood with immigrants.

Sample Tokyo at all possible hours, if you can.

Kinokuniya bookstore is quite good. Overall I don’t love the Roppongi part of town, though, fancy bars and restaurants for expats, though fun in its own way.

Visit a Japanese working class district, such as Ikebukuro, also a major subway stop.

Look for vending machines and collections of vending machines.

The arcades there, including for children, are pretty amazing.

Try Pachinko once.

Tyler

Addendum: Here are the suggestions from Scott’s readers.

Sunday assorted links

U.S. metro regions with the biggest intra-national trade deficits and surpluses

First, the biggest deficits (data for 2010, in billions of dollars):

Washington: -$86 billion

Miami: -$68 billion

San Francisco: -$41 billion

Atlanta: -$35 billion

Baltimore: -$33 billion

…Next, the biggest surpluses:

Los Angeles: +$63 billion

Memphis: +$29 billion

Greensboro: +$18 billion

Corpus Christi: +$18 billion

New Orleans: +$15 billion

Buffalo/Niagara Falls also has a sizable trade surplus as a percent of its gdp.

Which is the better list to be on?  Very often the surplus or deficit has a lot to do with demographics and population changes:

Now, I don’t think many people would consider New Orleans an economic winner. In fact, its population declined 11 percent from 2000 to 2010, partly because of Katrina, but also because of wider problems. And that very decline means that savings generated in New Orleans go elsewhere in search of returns.

That is from Paul Krugman at the NYT.  When it comes to Australia, by the way, one reason the country can run perpetual trade deficits, without inducing a financial crisis, is because of its rapidly growing population.

You might be interested in this Andrea Ferrero piece from the 2010 JME:

This paper investigates the contribution of productivity growth, demographics and fiscal policy in accounting for the evolution of the US external imbalances against industrialized countries during the last three decades. Productivity growth plays a dominant role. Demographics explain a non-negligible and nearly permanent component of the US trade deficit. Furthermore, the international demographic transition is crucial for large US external imbalances to be consistent with the persistent decline of world real interest rates observed in the data. Fiscal policy is of minor importance.

Productivity growth matters because foreign countries wish to invest capital in countries, such as the U.S., which employ it relatively well.

Saturday assorted links

1. The consequences of economic development.

2. A postulate for rival firms with common owners.

3. 44 African countries sign a free trade deal (though not Nigeria).

4. Profile of Vaclav Smil.

5. “He said the stone defence was intended as a last resort if evacuations failed.

6. “…we estimate that approximately 95% of the potential predictive accuracy attainable for an individual is available within the social ties of that individual only, without requiring the individual’s data.”  Link here.

Why an American third party remains unlikely

Donald Trump would not be President today if he had tried to mount a third-party candidacy rather than running as a Republican. Bernie Sanders would not be a national leader if he had just stayed in third-party politics in backwater Vermont rather than caucusing with the Democrats and contesting for control of the Democratic Party. So the existing parties are a shortcut to power for ambitious politicians. The parties are porous to those ambitions. In the process, they take on new influences, and new policy priorities.

So it’s really remarkable when you reflect back on what the Republican Party was at its founding and look at what it is today. And the Democratic Party as well. They’ve literally exchanged places. The Republican Party was a Northern party that was for African-American rights, high-taxes, and internal improvements.

That is by Frances Lee, the entire symposium is interesting.  Christopher Caldwell tells us: “The Democrats have become the party of sexual morality.”

How economists use Twitter

When using Twitter, both economists and natural scientists communicate mostly with people outside their profession, but economists tweet less, mention fewer people and have fewer conversations with strangers than a comparable group of experts in the sciences. That is the central finding of research by Marina Della Giusta and colleagues, to be presented at the Royal Economic Society’s annual conference at the University of Sussex in Brighton in March 2018.

Their study also finds that economists use less accessible language with words that are more complex and more abbreviations. What’s more, their tone is more distant, less personal and less inclusive than that used by scientists.

The researchers reached these conclusions gathering data on tens of thousands of tweets from the Twitter accounts of both the top 25 economists and 25 scientists as identified by IDEAS and sciencemag. The top three economists are Paul Krugman, Joseph Stiglitz and Erik Brynjolfsson; the top three scientists are Neil deGrasse Tyson, Brian Cox and Richard Dawkins.

Here is further information, via Romesh Vaitilingam.  But I cannot find the original research paper on-line.  These are interesting results, but still I would like to see the shape of the entire distribution…

Testing the eggheads in the cryptocurrency market

Some of the world’s best-known economists on Thursday announced plans to create what could be described as the thinking person’s cryptocurrency. Saga aims to address many of the criticisms frequently thrown at bitcoin, the world’s biggest cryptocurrency, to position itself as an alternative digital currency that is more acceptable to the financial and political establishment.

It is being launched by a Swiss foundation with an advisory board featuring Jacob Frenkel, chairman of JPMorgan Chase International and former governor of the Bank of Israel; Myron Scholes, the Nobel Prize-winning economist; and Dan Galai, co-creator of the Vix volatility index. The Saga token aims to avoid the wild price swings of many cryptocurrencies by tethering itself to reserves deposited in a basket of fiat currencies at commercial banks. Holders of Saga will be able to claim their money back by cashing in the cryptocurrency.

The currency also aims to avoid the anonymity afforded by bitcoin, which has raised financial crime concerns with regulators and bankers. Saga will require owners to pass anti-money laundering checks and allow national authorities to check the identity of a holder when required.

Oh so respectable sounding!  They’re not doing an ICO, instead there is a variable fractional reserve system, and the ruling principle is that Saga, the asset, “entitles its investors to a rising number of Saga as usage of the cryptocurrency grows.”  It sounds like a bet on the notion that bootstrapping is central to crypto success.  But do investors really want “safe harbours from the raging volatility”?  Do investors want a currency at all?  By the way, this one is proof of stake, not proof of work.

Here is their web site, and here is the White Paper.  Here are other readings on the asset.  Here is the original FT article, FTAlphaville is less impressed.

Do the participants have too much skin in other games?  So far I don’t see the point of doing this one, as it doesn’t create an asset with a truly different risk profile than the others, not from what I can see.